With the EU and the US being the world's most closely linked economic regions which jointly create 54per centof the world's GDP and provide 40per centof its consumers, this is not an unrealistic expectation. With bilateral trade between the EU and the US amounting to 15 to 20per centof the respective trade volumes and each one being the others' paramount investment partner, initiatives like the Transatlantic Economic Council can significantly facilitate trade, investment and innovation all at the same time.

It is an honour to be with you today to share my thoughts on German – US Innovation policy and the global challenges we must jointly strive to meet. I would like to thank the German Institute for Economic Research and the US National Academies’ Board on Science, Technology and Economic Policyfor bringing together a distinguished group of experts for this High-Level Conference.

Today’s conference here in Berlin was preceded by a well received conference on US-German innovation policy in Washington in November 2010, also jointly organised by the DIW and the National Academies. I share the view of the preceding speakers that the Washington conference was a success. I am certain that our conference here in Berlin will prove equally fruitful.

With this presentation, I would like to convince you of the following three key messages:

First, the complexity of global challenges means that cooperation and competition in innovation go hand in hand.

Second, the strong American- German economic relationship is the backbone of our innovation cooperation.

Third, to remain competitive, the already vibrant US-German innovation cooperation must be further strengthened. I will provide some ideas in which areas, in my view, our cooperation can be expanded.

As you may be aware, the Latin roots of the word „innovation“ are „novus“ - which means „new” – and „novare“ - which means „create, invent“. In its literal meaning, therefore, an innovation is a creation of something new. But not all things newly created are innovations: it is only the application, utilization and – ultimately – marketability that turns an idea into an innovation.

So innovation needs the market – and the market needs innovation. At the same time, the challenges we face today are incredibly complex: the aim of achieving prosperity for all in the face of limited resources, the challenge of climate change, of energy security, of food security. No one nation can address these challenges on its own. The more closely we work together, the more likely we are to find solutions to the problems we face.

This is why - when it comes to innovation - competition and collaboration can – and one might argue: must - go hand in hand. In a climate of healthy competition, Germany profits from US prosperity and vice versa.

This brings me to the second point: The strong American- German economic relationship is the backbone of our innovation cooperation. This becomes clear when we take a closer look at the economic relationship of our two nations:

The United States is Germany's most important trading partner outside the European Union. Likewise, Germany is the top trading partner of the United States in Europe. While the economic crises slowed down trade between our nations, transatlantic trade has been increasing again since 2009: bilateral trade amounted to 131 Billion USD in 2010, up from 115 Billion USD in 2009.

The figures on Foreign Direct Investment are equally impressive: German companies invested an accumulated 334 Billion USD in the US by 2009, making Germany the 5thlargest investor in the US. The United States is the second largest investor in Germany, right behind the Netherlands, with US investments of 116 Billion USD by 2009. As you see the transatlantic economic relationship has come a long way since the Marshall Plan!

On top of our strong bilateral trade and investment relationship, Germany and the US have also cooperated very closely on overcoming the global financial crisis within the framework of the G20. Our collaborative effort is paying off: the worst of the crisis is behind us. In Germany, the gross domestic product grew by 3.6 per centin 2010, the economy's strongest performance since reunification. We expect similar results for 2011. Total employment also reached its highest level since reunification with a working population of 40.5 million in 2010. Growth in the US is also picking up again, with a growth rate of 2.9 per centin 2010, while unemployment is still relatively high at 9per cent.

The occasional divergence of views between our two nations on how to handle the crisis, for example on the timing of fiscal consolidation, has so far served less as an irritant than as a catalyst for more meaningful exchange. The reason is that Germany and the US agree on the fundamental goal of promoting sound market-driven economic policies in democratic and free societies.

We argue that the role of the state in our two societies is to set the framework for economic activity and provide incentives for innovation. For brilliant ideas, we rely on you, the universities and scientific organizations, think tanks, research institutes as well as industry. The German Government has just launched a new initiative along these lines: last week, the “Government Program for Electro-mobility” - or E-Mobility - was launched. This program provides a framework for Research and Development with regard to E-mobility and is funded with 1 Billion Euro until 2013. Another aspect of the initiative is the strengthening of international cooperation with regard to norms and standards.

Cooperation on joint standards for innovative products is not only an issue for the bilateral relationship between Germany and the US, but also between the European Union and the US.

In the Transatlantic Economic Council, founded in 2007 upon German initiative, the US and the EU cooperate on future-oriented economic issues, one of which isindeed E-mobility. Germany has pushed for E-mobility to be included in the agenda of the Transatlantic Economic Council, which could use another boost, too. The aim is to develop joint norms and standards which do not only facilitate trade between the US and the EU, but also set standards which will then be adopted world wide.

The Transatlantic Economic Council and E-mobility will be important topics on the agenda of Chancellor Merkel’s official visit to the US in early June. The fact that Chancellor Merkel will be accompanied by key members of her cabinet is a testament to the breadth and depth of the transatlantic relationship. It is not only history that binds us together – ties between our two nations are strong and manifold: from the economic closeness and common values to vibrant cultural ties – with around 17per centof US citizens having German roots – and, of course, our cooperation in the area of science and technology.

Let me come to my third and final point:

German-US innovation cooperation is going from strength to strength. The Foreign Office actively contributes to this development, with our colleagues from the Ministry of Education and Research being in the lead. We believe, however, that in order to remain competitive, the already vibrant US-German innovation cooperation must be further enhanced.

Let me start out with a brief stocktaking of our cooperation and the role the Foreign Office plays: U.S.-German cooperation in science, technology and innovation has a long tradition. It comprises a broad range of topics, institutions, and individuals at all career levels and is supported by numerous players on both sides of the Atlantic. Universities, science organizations, research institutions, industry, foundations, and other stakeholders participate in the cooperation at both the federal and state levels.

Our bilateral cooperation ranges from space research – for example the International Space Station ISS and the stratosphere observatory for infrared astronomy SOFIA - to basic research in physics as well health, energy and civil security research. Cooperation on the development and use of scientific hardware in the US and Europe includes the US-participation in the German Electron Synchrotron DESY, in the Large Hadron Collider at CERN, as well as German and US researchers linking the strongest neutron source, the Spallation Neutron Source in Tennessee, with the Neutron-Spin-Echo-Spectrometer of the Research Centre Jülich in Germany. The opening of the Max-Planck Florida Institute with its focus on bio-imaging was another milestone in German-American cooperation.

The Foreign Office contributes to these cooperation efforts in a number of ways: First, we fund academic exchange programs and scholarships to enable American students and scientists to visit Germany. The growing number of participants reflects the increasing importance of research cooperation as a pillar of German Foreign Policy. In addition, we are particularly glad that 20 of the numerous American scientists who were granted a Humboldt scholarship to work in Germany received Nobel prizes later in their scientific careers.

A second effort in which the Foreign Office holds a stake is the German Centre for Research and Innovation in New York. This Centre was established last year at the initiative of the Foreign Office and the Federal Ministry of Education and Research. It is a cornerstone of the German Government’s goal to internationalize science and research. The Centre, located in the vicinity of the United Nations building, has already succeeded in strengthening Germany’s visibility as a hub for science, research and innovation. Since its foundation, it has hosted 15 major events with American and German partners of science and business. The Centre is making a significant contribution to transatlantic cooperation in order to help solve global challenges of the 21stcentury. If you have not yet visited the Centre, you have a standing invitation to do so.

Third, the US-German framework agreement on scientific and technological cooperation concluded in 2009 adds a strategic component to our already vibrant bilateral cooperation. We are looking forward to a first meeting of the joint commission in the next months on priorities, opportunities and concrete projects for enhanced US-German cooperation in science, research and innovation.

Strengthening cooperation with the US is part of the German government’s Strategy for the Internationalization of Science and Research. This strategy aims at strengthening our research cooperation with global leaders in the scientific field in order to address the challenge of global competition. This is the moment of truth if we want to keep up with the overwhelming dynamics in other regions of the world. In particular, it is key to promote the interest of young people in science and technology and encourage their decision to choose scientific and engineering subjects for their university studies.

The U.S. remains the world’s leading nation in science, technology, and innovation, and thus our preferred and most important partner in this field. The technological leadership of the US continues to be built on the contribution of foreign born scientists and engineers, both permanent immigrants and those staying in the country for a time.

In Europe, Germany is the top locationfor research and currently Europe’s engine of economic growth. However, we need more flexibility when it comes to the immigration of the highly-skilled as well as offering additional incentives to attract more scientists, engineers and other highly qualified personnel from outside the EU to boost our innovation and productivity.

However, the top positions the US and Germany currently hold are not uncontested. Rising powers are also emerging as centres of scientific excellence. This presents an opportunity and a challenge at the same time. To maintain our level of prosperity and security, we must embrace this competition and step up our efforts in order to stay champions of innovation.

Here in Germany, we closely followed President Obama’s State of the Union address in January. “Winning the Future” through innovation and creating sustainable jobs and prosperity was the President’s central message. I could not agree more!

Both the US and Germany have realised that in order to win the future, we must give priority to research, science, innovation, and education. We must maintain our innovative strength in order to remain “lands of ideas” also in the future. Only an innovation-friendly climate and technological progress will allow for sustainable growth, employment and prosperity.

In Germany, the government funding on science, research, innovation, and education is set to rise by a total of 12 billion Euro between 2010 and 2013. The aim is to invest 10 percent of GDP in research and education by 2015 – 3 percent in research and 7 percent in education. With research and development amounting to 2,8 per centof the GNP in 2009, Germany already ranks among the worldwide leaders in this field, but we still have a long way to go.

Moreover, in recent years the German Government – together with the regional governments – introduced substantial steps to strengthen competitiveness and sustainable economic growth, particularly through modernizing the German science, innovation, and education system.

Germany needs to strengthen further its expertise in developing innovative approaches to translating research results into new products, services, and procedures. The German Government aims to further enhance this cooperation between business and science. The Government’s High Tech Strategy 2020 identifies a number of concrete goals, such as 1 Million electric vehicles by 2020 or CO2neutral, energy efficient cities. The German High Tech Strategy 2020 goes hand in hand with the efforts of the European Union, whose 2020 strategy will put education, innovation and research at the centre of European growth policy.

Both the US und Germany have increased their efforts in education and training in the field of natural sciences and engineering. Both our countries share a similar approach of promoting regional innovation clusters, future-oriented technologies and the commercialization of research and development. The focus on industry, robust production capacities, innovative and export-oriented Small and Medium-Sized enterprises as well as a highly-qualified work force helped Germany to overcome the global financial und economic crises.

New challenges arise in the 21st century, for example asymmetric threats. Given the great importance of foreign trade and the vulnerability of critical infrastructures, a U.S.-German agreement on cooperation in the field of civil security research was signed in March 2009. It will produce mutual benefits and the U.S. and Germany will work together on issues such as visual analytics, cargo security, and the detection of hazardous substances. In the area of climate change, the Transatlantic Climate Bridge, created in 2008, serves to share innovative ideas of climate protection across the Atlantic and is yet another manifestation of the diversity of cooperation between the U.S. and Germany.

Finally, allow me to highlight a particular field in which I believe our cooperation should be enhanced: renewable energy and energy efficiency. This is one of the most decisive markets of the future. The US and Germany are in a perfect position to lead the development of these markets. US-German cooperation in this field has an immense potential. I would like to name just two small examples: In April, the US government granted the permit for the first Offshore-Windpark in the US, which will be constructed with German technology.

At the same time, the world’s largest solar park is being planned in Blythe in California, again with the participation of German companies. If we pool our resources and creativity, if we combine our strengths, the breakthrough of renewable energies worldwide will make our world more secure and more affluent, it will help the environment and create thousands of new jobs in both our countries.

The US, Germany and the international community as a whole continue to face complex challenges ranging from climate change to energy, health, mobility, security, communication and food security. A giant leap in research and innovation is needed so that we can meet these challenges. We are more likely to succeed if we join forces by combining our resources, ideas and know-how.